By Jay Thakkar
The August series was quite positive for the bulls wherein Nifty was up by more than 5%. In the same series, Nifty 50 provided a breakout from its 2 months range which led to some short covering plus the aggressive long built-ups. The broader market however traded with a negative bias wherein the Nifty bank, Nifty midcap and Nifty small-cap underperformed the Nifty with a high margin. The Nifty rollovers are good as it saw 83.98% rollover against the average of 78.48%. The Banknifty rollover was lower than the average as it stood at 79.08% against the average of 79.41%.
As far as derivatives data is concerned, the FIIs were net long both in Index futures as well as stock futures in the August Series. In fact, their long positions increased towards the end of the series clearly indicating that the short term trend is positive from FIIs front.
The Pharma and Auto sectors are likely to witness some short covering in this series whereas IT and Chemicals are likely to see the momentum continuing on the long side. Hence these are the 4 sectors which one can eye on the long side, the metal sector can see some profit booking or short built up going ahead in the September series.
Nifty was consolidating within a range of 16700-16400 in the last series after a rally, however, the range is now broken on the upside which is quite positive. The immediate support now on the lower side is 16900 levels and till those levels are held the short term bias remains positive for the target of 17300 levels. Above 17300 levels, the extended target for the Index comes to 17600 levels and this major push now post two consecutive up days can come only with the help of Nifty Bank whose long-awaited breakout is pending.
The Nifty Bank did close well in the positive territory in the last trading session however the breakout is yet to happen in it. On the upside,36500 levels is an immediate resistance which when taken off will take the Index to 37200-37500 levels. The support on the lower side is pegged at 36000 levels and below that 35500 levels.
Mainly two private sector banks have kept the Nifty Bank under pressure so far and they are Kotak Bank and HDFC Bank and if these banks move up from hereon then the all-time high is very much possible.
(Jay Thakkar is the Vice President and Head of Equity Research at Marwadi Shares and Finance Limited. Views expressed are the author’s own. Please consult your financial advisor before investing.)